How do I tell if it's a supply or demand problem?

[BanDHMO]

Don't have the game yet, but watching a lets play and following along to learn. The player made a starting 1900 cheap design, opened a bunch of branches and factories and started making money.

In the monthly report I can see that every car produced got sold, zero put into reserves. This situation suggests to me that the design is doing great in the market and either an increase in production or price would make sense. However, each turn the production/sales numbers are falling slightly for some reason and he is trying to DROP the price to compensate.

Why is that? Is there some sort of an automation that drops the number of cars produced to exactly meet demand, and so this is actually a demand problem? Or is there some problem with the factories that causes a drop in output somehow? How can you tell what's going on and whether your production capacity is below or in excess of market demand?

[Eric.B]

Nice user name, the world must know about the dangers of Dihydrogen Monoxide!

Don't have the game yet, but watching a lets play and following along to learn. The player made a starting 1900 cheap design, opened a bunch of branches and factories and started making money.

You could always play along with the Demo: https://steamcommunity.com/app/285110/discussions/0/613939841571347735/

However, each turn the production/sales numbers are falling slightly for some reason and he is trying to DROP the price to compensate. Why is that? Is there some sort of an automation that drops the number of cars produced to exactly meet demand, and so this is actually a demand problem?

If it is the start of the game, demand decline is most likely due to more competition coming into the market. There are only so many people interested and can afford to buy a car. The more choices they have, the less sales a particular model will have. If the player does not have "Established AI" settings enabled, then the game will start empty, and the player will have a monopoly. Meaning the player will sell a lot more cars at the start of the game until AI companies set up shop in the player's city. If "Established AI" is enabled, there will be a few cars already on the market at the start of the game, thus making player sales not as high.

There are also several other reasons that sales can go down. Macro-economic events, change in vehicle type/fuel type popularities, age of the vehicle and components, boycotts, bad image, employee morale, etc.

Is there some sort of an automation that drops the number of cars produced to exactly meet demand,

The player can enable "Auto-Production" to manage their factory lines, thus reducing the amount of work they have to do in game. You can micro manage factories individually, use a bulk editor, or have the AI manage them for you. It's player preference.

In the case of the AI managing production, it will meet demand for the most part, within the range of your factory production capacities.

and so this is actually a demand problem?

If it's the start of the game, it's most likely a decline in demand due to increase competition. If it's later in the game, it's either the age of the vehicle, newer competition, low morale, and/or macro-economic events.

Or is there some problem with the factories that causes a drop in output somehow?

Factories will degrade over time, but it takes several years for it to become apparent. Low factory worker morale can also cause a decline in production.

How can you tell what's going on and whether your production capacity is below or in excess of market demand?

Estimated missed sales should be in the reports and also the Factory Production and Branch Distribution side panels. (Where you set how many vehicles to produce, and also where you set the price of the vehicles.) If you have missing sales, then you're not producing enough vehicles or your factories are outside of shipping range. You will need to either raise production, increase prices, or fix your shipping distances. If you do not have missing sales, then it means you're meeting demand. If you have excess reserves or production capacity then you need to cut production, lower prices, or expand.

Hopefully that explains it. :)

[BanDHMO]

Thank you, that helps me understand it a bit better.

They most certainly had auto production turned on, which I think is a great feature, BTW, to ease new players into the complexities of the game.

Where I'm coming from is that the first question I usually ask to understand a business is where is your capacity to fulfill demand in relaton to that demand? Are you over, resulting in low utilization, are you under, running hot on all produciton and still having to beat customers away? And, importantly, by how much? Once I establish that, I can look deeper into individual components to see if there are ways to improve factories, increase demand (like open more branches, etc). All of which, BTW, your game models, well done.

It sounds like lost sales number is a good indicator in one direction, when you have underproduction, but if you are over, like the youtuber was, there is no way to tell by how much from that. He lost zero sales every turn since the beginning of the game, and since he has auto-production, I'm not sure if there's a convenient way to tell just how much more of your production capacity you could be using.

For example, I lost no sales and I've sold 100 cars. Great. If I were to build a second factory and double my production to 200 cars, would that be a good move because actual demand is somewhere in 200s or a bad move because it's actually in low 100s and so the second factory will be 80% idle. How can you tell?

Take this as constructive criticism rather than a whine, but this kind of information could be nicely presented to players at a glance, similarly to how Capitalism Plus did it all the way back in the '90s. Two horizontal lines one on top of another. Top bar represents your current production capacity, bottom represents demand at current quality/price/competition/otherMarketVariables. If the top bar is longer, you have some underutilized capacity. If it's much shorter, you could raise prices or increase production. Very handy to identify what's happening to a particular model before digging deeper.

[Eric.B]

Originally posted by BanDHMO:

It sounds like lost sales number is a good indicator in one direction, when you have underproduction, but if you are over, like the youtuber was, there is no way to tell by how much from that. He lost zero sales every turn since the beginning of the game, and since he has auto-production, I'm not sure if there's a convenient way to tell just how much more of your production capacity you could be using.

If you have autoproduction enabled, you will not be over producing. (Or if so, not by much.) The way to tell if you are over producing is simple, If your reserve inventory is climbing, you're producing too many vehicles. This information is in many of the same places as the lost sales stuff.

For example, I lost no sales and I've sold 100 cars. Great. If I were to build a second factory and double my production to 200 cars, would that be a good move because actual demand is somewhere in 200s or a bad move because it's actually in low 100s and so the second factory will be 80% idle. How can you tell?

Incorrect. If you sold 100 cars and had 0 lost sales your demand is 100 cars. If you produce 200 cars the next turn, you will sell 100 cars and have 100 cars in inventory. (Assuming demand remains the same. Demand won't increase due to increased production)

Let's say you produced 100 cars and lost 50 sales. If the next turn you produced 200 cars, you will sell 150 cars and have 50 in inventory. (Assuming demand remains the same.)

If you produced 200 cars, but only sold 30. Your demand is 30.

Demand = number of cars sold + lost sales.

When I say something like this:

If you have excess reserves or production capacity then you need to cut production, lower prices, or expand.

I am talking about expanding distribution, not production.

Take this as constructive criticism rather than a whine, but this kind of information could be nicely presented to players at a glance, similarly to how Capitalism Plus did it all the way back in the '90s. Two horizontal lines one on top of another. Top bar represents your current production capacity, bottom represents demand at current quality/price/competition/otherMarketVariables. If the top bar is longer, you have some underutilized capacity. If it's much shorter, you could raise prices or increase production. Very handy to identify what's happening to a particular model before digging deeper.

No worries, but the information is the same. We just display it as raw numbers instead of two progress bars. I lean toward numbers over GUI stuff because our GUI system does not support things like progress bars. So anything like that would have to be manually programmed with many pictures. PITA for what I believe is not much gain. Lost sales are above zero, you're under producing. Production higher than sales, you're over producing... The data is already there. And presented everywhere its needed.

[Eric.B]

I should point out, lost sales in the context of the game are sales lost due to lack of supply. Not sales lost to the competition. We do not do any tallying for sales lost to the competition, except for the fact you can see the actual sales of the competition. (Which is a fairly good indicator of the sales you lost to them. IE, all of them... ;) )

[BanDHMO]

Yes, sorry, I got my example backwards. I'll make an excuse and blame the heat. :) Of course, you're right, if you have 100 production and 0 lost, then production expansion is pointless.

What I meant to say was, when your lost sales are 0, then the way to know how far off you are from equillibrium is by looking at increase in inventory. But with automated production there never is an increase in inventory, as the game automatically adjusts actual production to match demand, so that delta doesn't appear to be visible. Or is it? Likely I just don't know where to look.

I totally get not spending extra time to draw pretty graphs with data if the tools you are working with don't make it easy. If those three numbers (actual demand, actual production, and potential production) are all conveniently visible in one place, I think that's plenty good enough. This is a business sim game, you should be albe to reasonably expect players to read a spreadsheet and still have fun. :)

[Eric.B]

Originally posted by BanDHMO:

What I meant to say was, when your lost sales are 0, then the way to know how far off you are from equillibrium is by looking at increase in inventory. But with automated production there never is an increase in inventory, as the game automatically adjusts actual production to match demand, so that delta doesn't appear to be visible. Or is it? Likely I just don't know where to look.

With Auto-Production enabled, you would look in the Factory Expense report, and then scroll down to the Factory Information Tables. If you are on default build, it will show a percentage of production line capacity used. If you're on Testing build and newer it will show you the percentage of production line capacity used and it will also give you a summed amount of the total production speed you are doing. (This is slightly bugged with continental restrictions enabled. But will be fixed shortly.)

I totally get not spending extra time to draw pretty graphs with data if the tools you are working with don't make it easy.

I believe there are several graphs located in the reports if you dig down into the specific vehicle model reports. However these charts are not generated in real time and are not in the GUI. They're actually web pages the game creates and saves to your computer, and you view them in an embedded Chromium 12. :)